Mercury News interview: Greg Woock, co-founder/CEO, Pinger

Greg Woock, Co-Founder, & CEO at Pinger, sits in front of "Pinger Man," a piece he created while working at Virgin in New York about six years ago, in downtown San Jose, Calif. on Monday, April 23, 2012. The painting is by another artist. Woock used to be Richard Branson's top hand on consumer electronics. Before that, he was an early member of Palm. Pinger offers free, ad-supported texting and voice calls to smartphone users. The startup, which handles some 2 billion texts a month, is backed by Kleiner, Perkins, Caufield and Byers, DAG Ventures, Deutsche Telekom, and T-ventures and recently landed more than $7 million from Deutsche Telekom as part of an aggressive push into Europe. (Nhat V. Meyer/Staff)

Just after Facebook's $1 billion acquisition of Instagram last month, Reuters ran a short list of other startups that might be candidates for similarly eye-popping deals. Among household names like Pinterest, Spotify and Dropbox was Pinger.

It's fair to say the 7-year-old startup, based in an unassuming office building in downtown San Jose, was the least prominent on the list. "Most writers don't know who we are," said CEO Greg Woock. "But their kids do."

Pinger, backed by blue-chip venture capital firm Kleiner Perkins Caufield & Byers, launched its free texting app for smartphones three years ago and now handles more than 2 billion messages a month.

With the addition in late 2010 of an app that can turn an iPod Touch into a telephone, Woock reckons Pinger is the seventh-largest data carrier in the country. And now he's expanding into Europe, where a fragmented telecom industry has him predicting a dramatic ramp-up of last year's $20 million in revenue.

In an interview, Woock -- who was previously a top lieutenant to Sir Richard Branson -- held forth on the future of his 60-person company and of the broader telecommunications industry. Here's an edited transcript.

Q: So how'd you get into this racket?

A: I went to film school with an eye toward making commercials, and I was literally slicing film with a razor blade and taping it. I saw the (Commodore) Amiga and thought, "There's a better way to do this."

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So after school I went to go work for Canon, talked my way into a sales job I had no qualifications for, and the next thing I knew there were 15 Japanese guys in a room hanging on my every word. They were trying to figure out their entree into the digital space, and I had just spent all this time at the intersection of analog and digital, using computers to process audio and enhance imagery.

I got a call one day from Creative Labs (the maker of the Sound Blaster audio card for PCs) and was there almost eight years as vice president of sales. Then, I was lucky enough to meet Donna Dubinsky, who was starting Handspring. Their vision was that everyone would have a portable computer with an always-on data signal. I thought, "That's gonna happen, there's no question in my mind."

Q: What's Richard Branson like?

A: After Palm reacquired Handspring in 2003, I was approached for the CEO job at Virgin Electronics, which wanted to develop an MP3 player. Branson opened the door to his house barefoot, with his shirt unbuttoned to his navel and was like, "Hullo." He's a super-nice guy.

He still, I believe, doesn't use a computer. He didn't have a cellphone, even though he owned a cellphone company. But he got the idea we were going for, which was "Pandora meets the iPod Touch," integrated with Virgin Records.

Unfortunately, there were multiple companies in Virgin Group that would have had to be combined. We had all the assets, but the content guys were like, "MP3 is the bane of our existence, why would we ever promote cannibalism?" I eventually had to tell Richard, "This isn't going to work."

Q: Did you learn anything from him that you've taken with you as a CEO?

A: Yeah -- he had this saying, "Go where the customer is being underserved." When my partner (Joe Sipher) and I founded Pinger on April 1, 2005, the original idea was asynchronous voice messages, like Google (GOOG) Voice. It shows up in your phone as a text message, you click it, it plays my voice. The problem is, that's not what people do: When people talk, they want to have real-time communications. When they communicate asynchronously, they type.

Then in 2007, Steve Jobs made ubiquitous Handspring's model of a persistent data connection in people's hands, with an open application layer. We had this ability to send hundreds of thousands of text messages, so I said, "I'm just gonna make an app that sends them for free." Textfree came out in March 2009, and there was an explosion. It got all the way up to No. 4 in Apple's (AAPL) App Store.

Q: So if it's free, how do you make money?

A: We show about 3 billion mobile ads a month, which we mediate among different ad networks. If users don't click, we don't get paid. We immediately were profitable.

Then our CTO had the idea to assign phone numbers to an iPod Touch using Wi-Fi, and we negotiated to get carriage for text and voice to and from those phone numbers. Our customers are people who have generally static access to Wi-Fi -- kids in college, kids in high school. One in 10 teens in the U.S. uses our products every month.

But our biggest opportunity is international. When you send a text message in Germany, you're paying 40 cents; that's 20 times what you're paying here, with our flat monthly fees. No customer is being served by spending 50 cents on a text message from Italy to Spain.

It's like how Skype didn't catch on for a long time in the U.S. Who cares about your landline bill? Well, people in Europe did.

Q: How soon will it be until some bigger company makes you an offer you can't refuse?

A: It feels like it's imminent. Skype had, what, 170 million users, and they went for $8.5 billion? There are 6 billion mobile subscribers in the world (according to an estimate by the International Telecommunication Union). Somebody's going to get a billion subscribers. And that's worth multiple billions of dollars.

1. Played in rock bands in college and still keeps a classic Fender Stratocaster in his office.

2. Ran into idol Neil Young not long ago at the offices of venture capital firm Kleiner Perkins Caufield & Byers. (John Doerr took their picture on his iPhone.)

3. Met biological parents only recently.

4. When Pinger needed to expand to a second floor in San Jose's historic Lion Building this spring, Woock persuaded the landlord -- and, perhaps more impressively, city permitting staff -- to let him cut a hole in the ceiling and build a grand staircase linking the two levels.